The government on Tuesday announced financial incentives in the form of additional borrowing permissions to states to accelerate power sector reforms. The Department of Expenditure, Ministry of Finance said the move aims to “encourage and support the states in undertaking reforms to enhance the efficiency and performance of the power sector.”
Finance Minister Nirmala Sitharaman has announced in the Union Budget 2021-22 that states would be allowed to borrow an additional 0.5 per cent of their gross state domestic product (GSDP) each year for four years, from 2021-22 to 2024-25. This additional borrowing space is contingent on states implementing specific power sector reforms.
The Ministry of Finance has granted permission to 12 state governments to raise financial resources of Rs 66,413 crore through additional borrowing permissions. This permission is based on the recommendations of the Ministry of Power, which assessed the reforms undertaken by these states in the power sector in the financial years 2021-22 (FY22) and 2022-23 (FY23).
The breakdown of the amount allowed for each state is as follows: Rs 9,574 crore for Andhra Pradesh, Rs 4,359 crore for Assam, Rs 251 crore for Himachal Pradesh, Rs 8,323 crore for Kerala, Rs 180 crore for Manipur, Rs 192 crore for Meghalaya, Rs 2,725 crore for Odisha, Rs 11,308 crore for Rajasthan, Rs 361 crore for Sikkim, Rs 7,054 crore for Tamil Nadu, Rs 6,823 crore for Uttar Pradesh and Rs 15,263 crore for West Bengal.